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In a Democracy Now exclusive, investigative reporter Greg Palast reports from Ecuador where he interviews the country’s new president, Alfredo Palacio, and takes a look at whether he will join the popular leftist movements in Latin America or will continue the neoliberal program of his predecessor. [includes rush transcript]

For today’s broadcast we are joining up with Think Global, public radio’s week of special coverage focusing on globalization. And we begin today in a country that is facing significant pressure from the International Monetary Fund, the World Bank, multinational corporations and the US government. And that country is Ecuador. Last month, the country grabbed international headlines after mass protests forced President Lucio Gutierrez to flee the country. “Sucio Lucio,” or Dirty Lucio, as he was called by some, rose to power in 2002, promising to break away from the supposedly voluntary austerity plan imposed by the World Bank. But, within a month of taking office, Gutierrez flew to Washington and was photographed holding hands with President Bush.

When he returned to Quito, he quickly went back on many of his campaign promises and tightened the austerity measures, including raising the price of cooking gas. Mass protest ultimately led to a scene where Gutierrez was inside of his palace, surrounded by more than 100,000 protesters. After Gutierrez fled last month, the country’s congress named his vice president Alfredo Palacio as the new president. Palacio takes over a country that sits on more than 4 billion barrels of known oil reserves. Many in Latin America and in Washington are waiting to see whether Palacio will join the popular leftist movements in Latin America or will continue the neoliberal program of his predecessor. Investigative reporter Greg Palast traveled to Quito and met with Palacio. He prepared this exclusive report for Democracy Now! in the mountains of Ecuador.

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AMYGOODMAN: Investigative reporter Greg Palast traveled to Quito and met with Palacio. He prepared this exclusive report for Democracy Now! in the mountains of Ecuador.

GREGPALAST: Ecuador has a new president, and George Bush has someone new to hate. Crowds in Quito, in front of the presidential palace, are shouting, “Todos fuera! (Everybody get out!).” Last month 100,000 angry Ecuadorians, from Indians to accountants, forced the last president to flee the country. They called him “Sucio Lucio (Dirty Lucio)” Gutierrez, for going along with demands of George Bush and the World Bank to cut government spending on health and education. I asked the women in bowler hats and this man why they were protesting. He is saying he can’t get anything to eat.

The demonstrations may be in Quito, but the real action is here in the rain forest, where the World Bank and Occidental Petroleum know that Ecuador has what they want: Oil.

I traveled to the jungle district, where Occidental Petroleum is hunting for oil, and trekked through some mud. And more mud.

They don’t call it a rain forest for nothing.

Development damage is serious, with cutting so extensive records show rainfall has been reduced by half. I stopped at a farm here in Mindo to ask what the locals thought of the oil drilling and oil money. This is farmer Ernesto Orozco.

ERNESTOOROZCO: [speaking Spanish]

GREGPALAST: He says, “I think the oil drilling is bad for Ecuador, because the oil money never gets to the people.” He is more right than he can imagine. We have obtained these documents from inside the I.M.F. and World Bank, marked “For Official Use Only.” They are highly confidential with restricted distribution, not to be disclosed. This World Bank dictat says Ecuador must give 90% of its new high oil revenues to foreign bondholders for debt buybacks. Ecuador may spend only 10% of its new oil wealth on social spending such as health and education. The day he took office, President Alfredo Palacio announced he would put social spending first and hold back some of the oil money from bondholders. That’s not what George Bush wanted to hear. Condoleezza Rice shot a diplomatic cruise missile at Palacio, effectively calling for his dismissal, so I returned to the Capitol. There I passed through a phalanx of troops to get into the presidential palace, and to ask the President himself about the World Bank documents requiring him to use the oil money for the debt holders.

ALFREDOPALACIO: If we pay that amount of debt, we’re dead. And we have to survive. And the most convenient things for them is that we survive. If we die, who is going to pay them?

GREGPALAST: I asked Palacio, a heart surgeon, why he would go to war over social spending for health care and education.

ALFREDOPALACIO: They condemn us to not to have health, not to have education. Mr. Palast, people, sick people is not going to produce anything. Ignorant people is not going to produce anything. So we have to invest in that in order to increase our production, which is the only way to improve, to make economical improvements, and then we’ll be ready to pay our debts.

ALFREDOPALACIO: I only have to demonstrate that this is an honorable country, that we are recuperating our Constitution and our dignity. To be a very — a man at that level, we have to be able to pay what we debt, but they have to listen to us, you know, in order to keep our people living, alive.

GREGPALAST: Here above the capital, 10,000 feet in the air, it’s pretty. It’s also pretty grim. Two-thirds of all Ecuadorians live in abject poverty, and the President says unless the I.M.F. gets its foot off the nation’s neck, they’re dead. From Ecuador this is Greg Palast, reporting for Democracy Now!

AMYGOODMAN: And this is Democracy Now!, democracynow.org. Greg Palast joins us now from Santa Fe, New Mexico. Welcome to Democracy Now!, Greg.

GREGPALAST: Morning, Amy.

AMYGOODMAN: It’s good to have you with us. Can you talk about the documents you got and what is happening with Ecuador in the context of globalization in Latin America right now?

GREGPALAST: Well, two things. First, the documents we got from inside the World Bank, I have gotten a whole stack of them. I must have about 5,000 pages of material. It is really typical. It basically is a bunch of secret agreements made with finance ministers that says you’re going to turn over all your money, and usually, privatize your electric companies, privatize your water companies, sell off everything to pay off old debts. But what’s happening is that there is a revolt all across Latin America, and we’re seeing in effect the New World Bush Order collapsing in Latin America. Hugo Chavez in Venezuela, Lula, the President of Brazil, and probably the number one dissident is Kirchner, the President of Argentina, just said we’re not going to pay the bond debt. Ecuador is extraordinary because they are a really wealthy country sitting on a bunch of oil, and with oil prices up, you know, they thought that they would get something out of it. But these secret agreements say 90% — 90% of the new oil money, all this big oil money that’s flowing in goes to foreign bondholders, speculators. It’s just extraordinary. And you have to understand, this is not just paying off interest, this is paying down principle. It is a huge, huge increase in — it’s a huge, huge windfall for speculators that bought up Ecuador’s bonds at 10 cents on the dollar and now they’re getting paid 100 cents on the dollar. It’s a huge windfall for financiers. And Ecuador is saying forget it. But they’re just the last in a whole line of dissident nations. What’s unusual here is Palacio, you know, he lived in America for 10 years. He’s a cardiologist. If he were in the United States, he would probably be a Republican. But he is saying you can’t smother our country, and he’s just following in line with, like I say, Ecuador with Argentina, Brazil, other nations, and now it looks like even Mexico is going to go down that route. Basically the United States — not so much the United States, but the Bush world, the Bush administration is losing its complete grip south of the border.

AMYGOODMAN: Greg Palast, can you talk about Secretary of State Condoleezza Rice’s latest comments about Ecuador?

GREGPALAST: Well, basically I think the U.S. is used to the idea if they don’t like someone, they’ve got to go. They actually favored Palacio, a very conservative guy. They thought he would be, you know, a — go along with the World Bank dictates, that he would pay off the bondholders, he’d turn over the oil wealth, he’d be a nice guy. They’re so used to Latin America being a source of bananas, oil, and interest payments, that they’re absolutely stunned that someone would say no, especially a guy like Palacio, he’s a mild-mannered guy. This is not a Hugo Chavez who’s, you know, ready to fight the New World Order. It’s a very conservative guy, but he’s saying you can’t do this to us, and so Rice was shocked when she said, “Oh, this guy has got to go. Let’s hold quick elections,” even though he’s the Constitutional President, he’s elected. She wanted new elections to have someone more to George Bush’s liking. And so she’s shocked when he said no. Now, of course, he’s trying to compromise. I do know he said he spoke with Rice and her people and basically after that meeting came out endorsing Plan Colombia, allowing bases — U.S. military bases in Ecuador. So he’s giving in a bit. He’s not resisting completely. On the other hand, he’s saying you’re not going to choke our nation. I mean, the abject poverty in a nation sitting on a pool of oil, he says this will not stand.

AMYGOODMAN: Can you talk about U.S. military bases in Ecuador and also the position of Ecuador on Plan Colombia, dealing with Colombia?

GREGPALAST: Well, what’s happened is, you have to understand, just north of Ecuador is Colombia, and you have a huge military operation going on there under a conservative government with support from George Bush, which is a war on leftist guerrillas disguised as a war on drugs. Now Ecuador had been officially resistant to this, but in effect had permitted it to go on, and Ecuador becomes kind of a military staging area for Plan Colombia. Now, Palacio is not going to permit the actual use of U.S. troops based out of Ecuador to attack into Colombia and take part in it. But he’s not going to close the bases as most Ecuadorians want. So he is trying to walk a fine line between, you know, telling the U.S., George Bush and Condoleezza Rice to jump in the ocean; on the other hand, you know, so he’s going along with a bit. He had one bit of resistance, by the way. He’s against spraying of crops, because he’s a medical — you know, being a medical doctor, that’s the one thing he says he simply can’t go along with, which is basically, you know, poisoning people from the air. As far as he’s concerned, that’s a type of illegal chemical warfare that he’s not going to put up with if Ecuador is in any way involved.

AMYGOODMAN: We’re talking to Greg Palast, who is an investigative reporter. His reports often appear on the BBC. His exclusive report with us on the President of Ecuador for Democracy Now! Can you talk about the U.S. companies who are profiting now, looking at Ecuador?

GREGPALAST: Well, we have Occidental Petroleum. I was out where they were trying to drill, just ripping up the jungle. I mean, and they’re so used to that, they’re so used to just going in, ripping up the jungle and sucking up the oil for next to nothing. There is huge resistance, not only in Ecuador, but Colombia —- excuse me, Bolivia is on fire over this matter, where the U.S. oil companies and British gas companies are trying to grab Bolivia’s gas, and the people are saying, no, we don’t want this drilling because we know we’ll never see the money. Just like Ecuador, basically the oil gets sucked out, but the benefits of the big oil money are going now to the foreign bondholders, either to pay off all debts, or in the case of Ecuador, simply to create a windfall for those bondholders. So, you have Occidental Petroleum, you have Texaco, which is in fact in the middle of a trial now in the United States for destroying indigenous property and poisoning the natives with the oil drilling process -—

AMYGOODMAN: Now, ChevronTexaco, which is now just being called Chevron, and then you have Noble Energy of Houston and Duke Power of the Carolinas, as you write in a piece in The Nation magazine.

GREGPALAST: Yes, that’s right. I have a piece in The Nation you can get at GregPalast.com today. But what you have is also a grab for the electricity and water resources of these nations. The World Bank wants them to sell off all their electricity and water supplies. And once again, from a surprisingly conservative guy, it’s surprising that he is saying, no, we’re not going to sell you everything that is not nailed down in this nation.

AMYGOODMAN: Well, I want to thank you very much, Greg Palast, for joining us with your exclusive report. Greg Palast, just back from Ecuador. Thanks, Greg.

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